RWJ Analysis of ACOs

By November 20, 2009Commentary

A number of reforms to the health care delivery system have been proposed to address cost and quality concerns.  Accountable Care Organizations are currently very much in vogue, but as is often the case, there is not necessarily a clear definition of what these ACOs are or would be.  And there certainly is not a research-backed basis for identifying how these organizations should be operated and funded.  A new Robert Wood Johnson policy brief explores these issues.  (RWJ Brief)

The paper identifies several key questions in setting up ACOs, including:  is participation by providers mandatory or voluntary; must they be led by physicians and will physicians be assigned to certain ACOs; what providers other than physicians should be in an ACO; how will the ACO be paid; and will beneficiaries be forced to choose an ACO and be locked into one.

For those who have been around managed care for a long time, the discussion bears an eerie resemblance to capitation problems; problems which were solved in a few areas such as southern California, but generally caused capitation to disappear as a payment method for providers.   In particular, getting physicians and other providers to agree on how much of a fixed sum they each receive and on appropriate care provision, is extremely difficult.  And if ACOs don’t use a fairly risk-intensive payment mechanism, it seems unlikely that the right incentives are in place to control costs through reduction of inappropriate care.

The report’s conclusion that ACOs won’t be a short-term fix is warranted; the notion that they are still worth exploring is more questionable, given the dearth of experience in making similar concepts work.

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